Squabble over capital spending continues into next year's budget

The state capital budget introduced Tuesday on the Senate floor is irresponsible and falls short of meeting basic government needs, Gov. Sarah Palin said.

But Senate finance leaders are boasting that their spending plan would give the state's economy a healthy boost while putting plenty aside for the future.

Palin and legislators, still sparring over the current year's level of capital spending, are butting heads over next year's plan as well.

That's after a capital budget bill doling out hundreds of millions of dollars for everything from road construction and school maintenance to performing arts centers and a Zamboni blade sharpener left the Senate Finance Committee headed for the full Senate.

"Not that a Zamboni blade isn't great. I love Zambonis but should that be a higher priority than the troopers' equipment they need in their cars to address public safety needs?" Palin said.

The Senate Finance Committee's proposed capital budget currently stands at $1.8 billion for fiscal year 2009, with $556 million from the general fund, $796 million in federal funds and $450 million in other state funds. The House is expected to add more projects.

"It's the evolution of an appropriation bill," said Senate Finance Co-Chairman Bert Stedman, R-Sitka. "The House still has its work to do."

Palin acknowledged that the budget is still a work in progress, but she said it worries her that lawmakers have not indicated their plans for overall spending and if they intend to use bonds to finance some of the $240 million in projects she wants to put before voters.

Legislative leaders won't say if they have a spending target and House and Senate leaders are at odds over whether to pursue bonds and for how much.

At a news conference Tuesday, Senate lawmakers used a 1982 constitutional amendment as a justification for whatever spending level they end up with in the capital budget. Written to be a constitutional cap on spending, the language also says that at least one-third of state revenues should be reserved for capital projects and loan appropriations.

Stedman said that would amount to about $2.1 billion in state general fund dollars, "but we are only at about a quarter of that now."

"I don't buy into an argument that a constitutional spending limit is an excuse to spend," Palin retorted.

Senators also said they have room to spend because they have put a priority on savings.

The state expects to reap more than $8 billion in surplus revenues over this fiscal year and next from high oil prices and a new oil production tax. Lawmakers have already set aside $5 billion in 2008 and 2009 state revenues and said they intend to set aside even more later.

"It's a savings spree, not a spending spree," Stedman said.

That, too, inspired a retort from Palin, who said a lot of savings should not be justification for a lot of spending.

The ongoing squabble points out frustrations on both sides and an apparent lack of communication despite hours of meetings between the administration and legislators.

The meetings include discussion of the governor's line item vetoes in the current year's capital budget. Angry lawmakers reinserted some of those projects - $70 million worth - into the supplemental budget, which is normally reserved for emergencies and unanticipated needs in the current year. Palin has had lawmakers come to her office to justify the requests, and she is expected to veto at least some of those projects again by Thursday.

Palin's staff also has been meeting with Senate finance leaders on next year's capital budget. Palin herself made the House an offer at an informal meeting in the speaker's office last month.

Stedman said her offer of $1 million per House district in discretionary spending doesn't come close to what he believes is needed. He'd prefer to see the operating budget cut, he said.

"There are a lot of legitimate district needs and we have the ability not only to have substantial savings but a fairly robust capital budget to push the economy forward and build our infrastructure," he said.

"To have a concentration on overall spending to reflect the days when you ran budgetary deficits, that's absurd. It just doesn't add up."